Puregold is facing the health crisis with a strong balance sheet. In the first half, the grocery operator reported a 20.1% on-year surge in net income to P3.4 billion after panic-buyers swarmed the company's 444 stores nationwide during the lockdown period to stock up on food and other essential items.

Awash with cash, Puregold to borrow P12-B to lock in low rates

Ian Nicolas Cigaral (Philstar.com) - September 25, 2020 - 12:22pm

MANILA, Philippines — Despite having one of the strongest balance sheets amid the pandemic, Puregold Price Club Inc. announced plans to borrow P12 billion to take advantage of cheap borrowing costs.

While it seems unnecessary to borrow given its strong cash position, the grocery operator disclosed to the stock exchange that debt to be incurred through corporate bonds is meant “as an opportunistic strategy to raise long term money at low interest rates.”

“The proceeds will be deployed for growth initiatives and to accelerate business expansion by opening more Puregold and S&R stores in strategic areas in order to continue to provide basic goods and essential products in those markets,” Puregold said.

The offer date was not disclosed.

Sought for comment, April Lee-Tan, head of research at COL Financial, expects high demand for Puregold’s papers given the company’s healthy financial position. “Demand should be okay because bank deposit rates are very low,” Tan said in a text message.

“Also, Puregold should be able to pay its debts because it is under-leveraged and business remains resilient to the pandemic,” she added.

Puregold’s grocery business heavily benefited from consumers stocking up on essential items ahead of the lockdown that is now running on its sixth month. In the first half, while other listed firms continued to bleed financially, Puregold increased profits by more than a fifth year-on-year to P3.4 billion.  

Puregold currently operates 444 stores nationwide. 

Shares in Puregold are set to end the trading week down. As of 12:16 p.m. on Friday, Puregold is trading down 2.16% at P48.30 apiece. 

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